Precious metals such as gold, silver, and platinum are valued by many investors as a hedge against inflation or a safe haven in times of economic turmoil. They also are valued for their rarity and their use in a broad range of industrial applications. Precious metals exchange-traded funds (ETFs) are a popular way to invest in these metals, either through physical or futures-based exposure. ETFs can offer a more liquid and easier approach to investing in precious metals than buying futures contracts, purchasing bullion, or buying stock in publicly traded companies involved in the exploration or production of these metals.

Key Takeaways

  • The precious metals sector has dramatically outperformed the broader market over the past year.
  • The ETFs with the best 1-year trailing total return are SIVR, SLV, and PALL.
  • Two of the top precious metals ETFs hold silver while the third is invested in palladium.

The precious metals ETF universe is comprised of 14 ETFs, excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). These ETFs are invested in physical precious metals rather than the shares of precious metals mining companies. The S&P GSCI Precious Metals Index has outperformed the broader market with a total return of 35.4% over the past 12 months compared to the S&P 500's total return of 17.5%. The top precious metals ETF, based on performance over the past year is the Aberdeen Standard Physical Silver Shares ETF (SIVR). We examine the top 3 best precious metals ETFs below. All numbers in this story are as of August 10, 2020.

Aberdeen Standard Physical Silver Shares ETF (SIVR)

  • Performance over 1-Year: 65.1%
  • Expense Ratio: 0.30%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 636,571
  • Assets Under Management: $901.6 million
  • Inception Date: July 24, 2009
  • Issuer: Aberdeen Standard Investments

SIVR is structured as a grantor trust, offering investors a certain degree of tax protection. The fund tracks the price of silver and its holdings are 100% silver bullion. The ETF offers investors a simple way to invest in silver without having to worry about storage or insurance costs of holding physical metal or with some of the complexities involved in trading futures contracts.

iShares Silver Trust (SLV)

  • Performance over 1-Year: 64.8%
  • Expense Ratio: 0.50%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 42,191,020
  • Assets Under Management: $16.2 billion
  • Inception Date: April 28, 2006
  • Issuer: iShares

SLV is also structured as a grantor trust, providing some tax protection for investors like SIVR. The fund is 100% physically-backed by silver bullion and seeks to track the price of silver. It provides investors a way to benefit from appreciation in the price of silver without the costs associated with holding the physical metal and without being concerned with the complexities of investing in silver futures. While it is similar in many ways to SIVR, it does have a slightly higher expense ratio.

Aberdeen Standard Physical Palladium Shares ETF (PALL)

  • Performance over 1-Year: 51.9%
  • Expense Ratio: 0.60%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 42,791
  • Assets Under Management: $363.1 million
  • Inception Date: January 6, 2010
  • Issuer: Aberdeen Standard Investments

PALL also is structured as a grantor trust, which has certain tax advantages like SIVR and SLV, above. The fund offers physical exposure to palladium by holding bars of the metal in a secure vault, and tracks the spot price of the metal. PALL offers investors a convenient way to invest in palladium without having to worry about separate storage costs or with the complexities associated with futures contracts. However, palladium is often highly correlated to the automobile industry and can be very cyclical.